- Some regulators believe “private cryptos” should be banned
- CBDCs continue to be supported by institutions in India
India has had a complicated relationship with cryptocurrencies over the years. This relationship was in the spotlight recently after a local media report claimed that key regulators and institutions in the country are in favour of banning “private cryptos” like Bitcoin and Ethereum. According to Hindustan Times, these regulators believe that any advantages offered by the likes of the aforementioned “private cryptos” can be leveraged by the use of CBDCs.
Here, it’s worth noting that the aforementioned report made no mention of the officials in question or the institutions that share this point of view. Hence, it’s difficult to ascertain how strongly the government itself feels about this proposition.
Right now, the Indian government is preparing a discussion paper on the topic of cryptos, a paper that might possibly precede a legislation. While the government has chaired extensive rounds of consultations over the past few months, the consensus right now is that the risks of crypto-use outweigh its benefits.
In fact, one official claimed,
“CBDCs can do whatever cryptos do. In fact, CBDCs have more benefits than cryptos, minus the risks associated with private cryptocurrencies.”
In light of the asset class’s growing popularity in the country, however, the Indian government might choose to side with the likes of Bitcoin and Ethereum eventually though. Also, regardless of its PoV on cryptos, India has always looked positively at blockchain technology and its broader applications.
Lack of “institutional confidence”
A reversal of the aforementioned consensus will depend on institutional confidence in the asset class. For example – The Governor of the Reserve Bank of India has for long voiced concerns about cryptos and their volatility. Like many who work with the government, Shaktikanta Das has often spoken highly of CBDCs, while also highlighting the possible risks associated with cryptos.
India’s Finance Minister Nirmala Sitharaman holds similar opinions too.
Back in 2023, India adopted an IMF-FSB synthesis paper that advised against an outright ban of cryptocurrencies. However, the paper in question also allows for flexibility to impose stricter regulations on this asset class. Right now, it would seem that India is leaning towards that idea.
Crypto-entities feel the heat too!
Not just cryptos, but crypto-entities have been on the wrong side of the Indian government too.
Consider the case of Binance, for example. Back in January 2024, India blocked access to the crypto-exchange’s app and platform, citing non-compliance with money laundering laws. This was reversed in August, however, not without Binance first registering as a reporting entity with India’s Financial Intelligence Unit (FIU).
